chapter  5
19 Pages

Analysis of IPO underpricing and clustering in the Hong Kong equity market


Initial public offering (IPO) underpricing is a well documented fact in many empirical studies in financial markets all over the world. During the period from 1990 to 1998, more than $27 billion were left on the table in the United States by IPO underpricing (Loughran and Ritter, 2004). Although great effort has been made to verify the existence of IPO underpricing and other IPO related puzzles, such as long term underperformances, it is surprising that there are relatively few works on the degrees of IPO underpricing and the reasons for the differences in the level of underpricing.